The Korean War has been on “pause” for six decades, after a cease fire agreement was signed in 1953. Since that time, South Korea has developed into an economic powerhouse, while North Korea has remained isolated and largely impoverished. On April 27, the world watched, somewhat skeptical, as the leaders of the two countries met and talked about formally ending the war and reestablishing North Korea’s connections to the outside world. It may be worth thinking about how such a peace could impact us at home.
South Korea is one of the world’s largest energy importers. As of last year, it was the fifth largest importer of coal and today it is the third largest importer of liquefied natural gas (LNG), behind China and Japan. North Korea, in contrast, relies almost exclusively on its own coal and hydropower. This provides insufficient electricity generation, and as a result the country’s grid is unreliable. Many of the more affluent households have purchased their own solar panels to compensate.
There is reason to believe that North Korea may want in to the natural gas market. Russia reportedly sold $1.19 million worth of gas and gas liquids to North Korea in 2016. Additionally, South Korea just announced a new energy plan in March 2018 that calls for expanding the role of natural gas in electricity, moving it up from 18% of generation today to 27% in 2030. In the past, there has been talk of bringing some of this gas from Russia through North Korea via pipeline and those hopes have been revived.
With China and South Korea aggressively moving away from coal to natural gas for environmental reasons, and future access to both Russian pipeline gas and LNG from America and other sources, it is hard to imagine that North Korea would not want to begin using natural gas. The Koreas will be unlikely to rely completely on Russian gas either, meaning U.S. LNG should remain an important source of supply.
U.S. LNG exports quadrupled in 2017, and South Korea is America’s biggest customer. American gas exports are expected to continue to grow as America brings more pipeline and liquefaction facilities online. Much of this exported gas is going to come from the Utica and Marcellus shale plays under Pennsylvania, Ohio, and West Virginia. If you want to explore your options for getting involved in the region, just call our land experts at (412) 212-7517.